The case was widely seen as a test of the watchdog's ability
to pursue firms based abroad but listed in Hong Kong, where
around 60 percent of public companies are from mainland China.

In July 2013, the Securities and Futures Commission (SFC)
invoked a special provision of Hong Kong's securities law to
force China's self-styled biggest recycler of scrap metal into
provisional liquidation, alleging evidence of accounting fraud.

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It was the first time the SFC had used the power to sanction
a listed company.

The SFC said CMR overstated its financial position in the
prospectus for its 2009 initial public offering. It also said
around 38 percent, 64 percent and 90 percent of gross profits
for 2007, 2008 and 2009, respectively, were fictitious.

On Thursday, the watchdog argued for the company to be wound
up at Hong Kong's High Court.

A late bid by minority shareholders to push for company
restructuring was pushed aside when Judge Jonathan Harris ruled
in favour of the regulator, saying there was "compelling
evidence" that CMR had engaged in "industrial scale fraud".

In a statement, Mark Steward, SFC executive director of
enforcement, called the watchdog's investigation "challenging".

"This is an audacious and dishonest scheme to deceive Hong
Kong investors and creditors," Steward said. "Liquidators will
be able to conduct an independent assessment of the company's
real position."

CMR did not contest Thursday's proceedings, though its
former management does not accept liability. Calls by Reuters to
CMR's Hong Kong office went unanswered.

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It is not certain that liquidation will ultimately be in the
best interests of CMR's shareholders and creditors, said
regulatory experts.

CMR is incorporated in the Cayman Islands and operates in
Hong Kong and Macau, but its most valuable assets are in
mainland China where Hong Kong rulings are not automatically
recognised, they said.

"For shareholders and creditors to realise any value in CMR,
there may still have to be court cases in the Cayman Islands and
on the mainland," said Michael Cheng, China and Hong Kong
research director at the Asian Corporate Governance Association.